Federal budget deal helps CT defense industry, state budget

A virginia-class attack submarine

General Dynamics Electric Boat

A virginia-class attack submarine

Washington – One of Rep. John Boehner’s final acts as speaker of the House this week was to negotiate a budget deal with the White House that will help Connecticut’s defense industry and save the state government nearly $64 million in health care expenses for low-income residents and state retirees.

The two-year budget was approved by Congress with the help of Democratic votes. Every single Democratic member of Congress, including all members of Connecticut’s congressional delegation, voted for it.

“This budget deal means we can spend less time worried about shutdowns and more time working to improve the lives of the people we serve,” said Sen. Chris Murphy, D-Conn.

But only about a third of the Republicans in the House and Senate backed the deal, objecting mainly to its increase in spending and extension of the debt ceiling.

The budget agreement has staved off a government default by extending the federal debt ceiling, scheduled to expire Nov. 3, until March of 2017.

It also raised the federal budget by about $80 billion above spending caps set by Congress in 2011. That hike in spending was divided evenly between the Pentagon and domestic programs, a move that helps keep on track plans to boost certain weapons programs manufactured in Connecticut – and to begin new ones.

“This provides a real opportunity for the Department of Defense to move forward with much needed investments in modernization, readiness, and technology,” said the National Defense Industrial Association in a statement this week. “We commend the president and our congressional leadership, who clearly placed our country’s interests ahead of politics.”

The agreement also will halt a scheduled 52 percent increase in the premiums some seniors pay for Medicaid Part B, which covers doctor’s fees and the cost of medical tests and outpatient care.

That provision spares the cash-strapped Connecticut state government from having to pay out nearly $64 million in fiscal years 2016 and 2017 to cover medical costs for some state retirees and so-called “dual eligible” recipients, that is low-income Medicare recipients who also receive Medicaid benefits.

Medicaid pays the Medicare Part B premium for these low-income residents, and it pays for deductibles, co-pays and prescription costs that Medicare does not cover.

Since Medicaid costs are split between the state and federal governments, the state’s share for covering dual-eligible recipients would have risen by about $16.4 million in the 2016 fiscal year and 32.8 million in the 2017 fiscal year, said Gian-Carl Casa, spokesman for the Connecticut Office of Policy and Management.

The state also would have had to pick up the increase in Medicare Part B premiums for state retirees, estimated to be about $4.5 million in fiscal year 2016 and $10 million in fiscal year 2017.

These expenses were not included in the state’s budget calculations and instead were included in a “Watch Area” by the state Office of Fiscal Analysis.

Others who would have had to pay the 52 percent premium increase include many federal retirees and high-income Medicare recipients.

On the down side for older Americans, the budget deal also ends a lucrative strategy for married couples called “file-and-suspend” that can boost lifetime Social Security retirement benefits by tens of thousands of dollars.

The strategy calls for the higher-earning spouse to file for Social Security benefits at his or her full retirement age, currently 66, but then suspend that filing while the benefit grows until that worker reaches 70.

File and suspend allows the worker’s spouse to start collecting benefits based on the spouse’s earnings record. But not for much longer. The ban goes into effect six months after the president signs the budget bill

Couples who are now benefitting from the file and suspend policy will be able to continue to do so.

The budget agreement also extends a 2 percent cut in Medicare payments to doctors that was set to expire.

Another fight over Planned Parenthood?

The budget deal was hailed by supporters as evidence Washington can still work in a bipartisan way.

“This agreement is a reminder that Washington can still choose to help, rather than hinder, America’s progress,” Obama said in a statement on Friday. “I look forward to signing it into law as soon as it reaches my desk.”

Sen. Richard Blumenthal said, “Connecticut’s economy benefits from smart, targeted financial commitments to our future – not from mindless sequester cuts and certainly not from repeated budgetary brinksmanship.”

But there are still budget hurdles.

Congress must still pass an “omnibus” spending bill by Dec. 11 that will distribute the budget deal’s money among all federal agencies.

Republicans unhappy about the agreement, and that includes several lawmakers running for the White House, including Sens. Marco Rubio of Florida, Rand Paul of Kentucky and Ted Cruz of Texas, could seek to add riders to the omnibus bill that could, among other things, defund Planned Parenthood.

That would result in a standoff with congressional Democrats and the White House.

And Connecticut’s defense industry won’t be able to rest easy until Congress approves another defense authorization bill that allows Congress to appropriate money next year for individual weapons systems.

Those include new helicopters built by Sikorsky, an increase in F-35 engines built by Pratt & Whitney, two Virginia-class submarines manufactured by Electric Boat and planning for a new class of ballistic-missile submarines that would replace Ohio-class boats.

Obama vetoed the previous defense authorization bill in large part because it would allow an increase in defense spending without assurances from GOP leaders there would be a similar increase in domestic spending.

GOP leaders are pondering whether they should try to override Obama’s veto or push a new authorization bill through Congress.

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